Which Method of Valuing Inventory Is Based on the Average

question 31

Short Answer

Which method of valuing inventory is based on the average of units?

---

Definitions:

Direct Materials

Raw materials that can be directly attributed to the production of a specific product or service.

Selling Price

The amount of money a customer pays to purchase a product or service.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products based on a set criteria, like direct labor hours.

Direct Labor Costs

The compensation provided to employees who are directly engaged in manufacturing goods or delivering services.